$199 computer could crack 'digital divide'

Scattered among the $500 to $1,000 desktop computers available at Walmart.com, one machine stands out. It doesn't have a unique design, but its price tag looks like a typo: $199.

Prices for consumer electronics goods, ranging from high-definition televisions to mobile phones, drop consistently, but few products have more potential to impact a person's ability to learn or find work than a computer.

The cheap computers will be sold beginning this week online and at 20 Illinois Wal-Mart locations. They're offered at a time when charitable efforts -- such as the "One Laptop Per Child" program, intended to provide portable computers for $100 to children in developing countries -- have struggled to achieve results. Those laptops now are to cost $200, but the program has yet to deliver a product.

The computer for sale at Wal-Mart, on the other hand, can put an affordable machine immediately into the hands of anyone, from students in low-income households to senior citizens on strict budgets, potentially addressing the critical social issue of a so-called digital divide in the U.S. between those with access to computers and the Internet and those without.

"What this will do is make it affordable to have a computer, or even multiple computers, at home," said Mohsin Dada, assistant superintendent for business at Schaumburg Community Consolidated School District 54.

The computers do not include a monitor, but those can be bought for less than $100, and the price could encourage more families to buy computers, said Sharnell Jackson, chief e-learning officer for Chicago Public Schools.

"This is a good thing for digital equity and digital excellence," she said.

According to a 2006 Chicago Public Schools survey, 72 percent of students said they use a computer at home. The remaining students access a computer at school, a library or at a friend's house.

The cheap price reflects Wal-Mart's buying power as the world's largest retailer and is an aggressive gambit by a Taiwanese company that has carved out a niche at the low end of the computer market. To get to $199, First International Computer had to forgo software made by Microsoft Corp. or Apple Inc. and try the little-used open-source computer platform.

"There are $60 to $90 savings on every single computer sold just by getting away from the Microsoft products," said Paul Kim, director of marketing for Everex, the in-house brand of First International.

What is open source?

Open-source software programs are developed using code that is available to anyone, typically free of charge. The most notable open-source platform, Linux, has become widely used on corporate server computers.

But consumers, other than hobbyists, who use Linux and open-source software are rare.

Whether people are comfortable with open-source software, or even aware it exists, these computers ship with an array of familiar software: a Web browser, word processing, programs for presentations and spreadsheets, e-mail, instant messaging and media-playing software for music and movies. Much of that software will be provided by Google.

The computer is being offered online at Walmart.com and in about 600 Wal-Mart stores nationwide. The PCs have started arriving in some stores, said Melissa O'Brien, a spokeswoman for the Bentonville, Ark.- based retailer.

"That's about one-eighth of our stores," she said. "It's a test of market demand for open-source software. It's very limited."

Al Gillen, an analyst who covers operating-system issues for technology analyst IDC in Framingham, Mass., said the low-priced computers "could be disruptive" for the computing industry, but it has the potential to expand the market.

"When you look at the people who take photos with their cell phones, it did not diminish camera sales," he said. "The photo quality is not good [with phones], but it enabled the adoption of a technology that was never addressed before. So the opportunity here is to serve a market that has never been served before."

For its part, Google supports the open-source movement and encourages developers and consumers to experiment with its offerings.

Wal-Mart has sold an open-source computer before. In 2002, it tried to sell a $199 PC that used the Lindows operating system. But the PCs were poorly reviewed, and there were compatibility issues working with peripheral devices, such as printers and digital cameras.

Gillen said those hurdles will need to be overcome with this effort.

"Are there adoption blockers here?" he asked. "If there is any kind of updating or installation required, it could be a challenge. Will you be able to install driver software for an old HP laserjet printer? Or will you have to buy a particular printer to work with this device?"

To ease some worries, the PC has a 1-year warranty and a 24-hour help line.

"We want people to accept this as a mainstream product," said David Liu, the founder of gOS, the California start-up that built the open-source operating system the PC runs on.

"The operating system will continue to grow. There will be upgrades."

Dada, the Schaumburg educator, said a "$199 computer can level the playing field for a lot of people. We should make every effort that there is no digital divide."